Chesapeake to renegotiate New York natgas leases

Thu Jun 14, 2012 1:39pm EDT

* About 4,400 leases to be renegotiated

* New York reconsiders its ban on fracking

NEW YORK, June 14 (Reuters) - Chesapeake Energy has agreed to allow thousands of natural gas leases in New York state to be renegotiated, the attorney general announced on Thursday.

Chesapeake Energy and other companies flocked to New York's gas-rich southern tier over the past decade, but a ban on the natural gas extraction technique known as "fracking" in the state in 2008 allowed companies to declare force majeure and extend idle leases.

But now, as New York considers opening its borders to drilling again, Attorney General Eric Schneiderman is allowing more than 4,400 landowners, many of whom opposed the extensions, to return to the table and negotiate new lease terms, he said in a press release.

"This agreement will provide a safety net for thousands of landowners by allowing them the opportunity to negotiate fairer lease terms, both financial and environmental, regardless of their existing contracts," Schneiderman said.

The agreement includes leases which have expired or will expire prior to Dec. 31, 2013. Chesapeake will pay $250,000 for the costs of the investigation, the release said.

New York's Department of Environmental Protection is currently considering allowing fracking in the state and expects to come up with a plan sometime this year. New York sits atop a portion of the Marcellus shale, one of the biggest deposits of natural gas in the country.

But fracking, the process to extract natural gas from shale rock, has received widespread opposition in New York as residents worry about the chemicals used and the potential to contaminate ground water.

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